Taxi operators to approach governmentt against Uber, Ola on breach of FDI rule

The Association of Radio Taxis plans to appeal to the department of industrial policy & promotion against app-based taxi aggregators for flouting a norm.Surabhi Agarwal | ET Bureau | April 23, 2016, 08:50 IST

NEW DELHI: In what could increase woes of Uber and Ola, radio taxi operators plan to approach the government accusing app-based aggregators of violating the latest guidelines around FDI in ecommerce marketplaces.

The Association of Radio Taxis plans to appeal to the department of industrial policy & promotion (DIPP) against app-based taxi aggregators for flouting a norm that bars marketplaces from offering discounts on their own as these have to come from vendors on the platforms. The FDI guidelines released last month also sought to end “predatory pricing” by online companies.

Aggregators such as Uber and Ola, which are funded by foreign investors, are going against the new norms by directly influencing pricing, said Kunal Lalani, president of Radio Taxi Association of India. “They obviously qualify as an ecommerce marketplace since they have always claimed before various court cases that they are just a marketplace and not actually a taxi company; so the same rules should apply to them as well,” he told ET. Uber and Ola did not respond to an ET query seeking comments on the issue as of press time on Friday.

Lalani, who is also chief executive of Mega Cabs, said Radio Taxi Association is currently seeking a legal view on the matter and plans to approach DIPP next week. Uber and Ola are already in a tug of war with some state governments over surge pricing. Siddhartha Pahwa, CEO of Meru Cabs, said, “The way these companies are operating — giving huge incentives to drivers and discounts to consumers — they will ensure that all the other players in the market are killed.” He said these firms use surge pricing to recoup the deep discounts.

“We have to think about not today but the scenario that the taxi industry will find itself in the next couple of years where customers will have no option but to agree to terms and conditions of these players since the rest of the competition will be dead,” Pahwa told ET.